Bitcoin’s tariff shock: Is this a pullback or a trend shift?

Bitcoin’s tariff shock has deepened, sharpening the question at the heart of this move. What began as a geopolitical jolt has now turned into a full-blown leverage unwind. On Wednesday, Bitcoin slid 4% to around $88,000, extending losses as risk aversion spread across equities, bonds, and currencies. In just 24 hours, total crypto liquidations swelled beyond $1.07 billion, underscoring how quickly sentiment has shifted.

This latest leg lower comes as investors increasingly rotate away from US risk exposure altogether. Gold surged to fresh record highs, the dollar weakened, and Wall Street suffered its steepest drop in months. Against that backdrop, Bitcoin is no longer just reacting to tariffs - it is being stress-tested as part of a broader macro reset.

What’s driving Bitcoin’s moves?

The immediate trigger remains President Donald Trump’s escalating tariff threat against eight European nations, tied to his insistence that the US must gain control of Greenland. Trump doubled down this week, declaring there was “no going back” on the strategy, reigniting fears of a widening trade war. Markets, already fragile, responded by slashing exposure across risk assets.

In crypto, leverage proved to be the weak point. CoinGlass data shows $359.27M in Bitcoin was liquidated over the past 24 hours. Long positions absorbed nearly all the damage, with $324.74 million wiped out, compared with just $34.53 million in shorts. 

Why it matters

Bitcoin’s slide to $88,000 reinforces a critical reality for traders: in periods of macro stress, crypto remains tightly bound to global risk sentiment. As US equities sold off sharply and the dollar weakened, Bitcoin tracked the same “risk-off” impulse rather than decoupling. This challenges the hedge narrative in the short term, even as longer-term correlations remain debated.

The broader context matters. Wall Street endured its heaviest hit of the week, with the S&P 500 falling 2.06% and the Nasdaq sliding 2.4%, before futures stabilised modestly. When equities, credit, and currencies all come under pressure simultaneously, leveraged assets tend to suffer first - and Bitcoin has once again been treated as part of that high-beta basket.

Impact on crypto markets and traders

The deeper sell-off erased confidence built earlier in January, when ETF inflows helped push Bitcoin close to $98,000. Instead, the focus has shifted to capital preservation. Ether dropped alongside Bitcoin, while altcoins saw comparatively smaller liquidation volumes, reflecting the increasingly concentrated positioning in the largest tokens.

At the same time, the forced deleveraging may be doing some longer-term work. Analysts at CryptoQuant have previously noted that aggressive liquidations often clear fragile positioning, reducing the risk of cascading sell-offs later. If macro pressure stabilises, a less leveraged market could provide firmer footing - though near-term volatility remains elevated.

Gold surges as “Sell America” trade builds

While crypto struggled, traditional havens surged. Spot gold vaulted past $4,800 an ounce for the first time, with silver also hitting record highs, as investors leaned into safety. The move has been framed by some strategists as a growing “Sell America” trade, marked by falling equities, a weaker dollar, and rising bullion.

Trade tensions sit at the centre of that narrative. European policymakers are preparing their response, with the EU set to hold an emergency summit in Brussels and weighing retaliatory tariffs worth €93 billion ($109 billion) on US imports. The prospect of tit-for-tat escalation adds another layer of uncertainty for risk assets, including Bitcoin.

Expert outlook

From a technical perspective, Bitcoin is under pressure but not yet broken. Previous support near $90,000 is now being tested, and sustained weakness below that level would strengthen the case for a deeper corrective phase. However, some analysts caution against assuming a trend shift too quickly.

Robin Singh, CEO of crypto tax platform Koinly, notes that February has historically been one of Bitcoin’s strongest months, delivering average double-digit gains over the past decade. “But underperformance wouldn’t be surprising, and it’s not necessarily a bad thing,” he said, suggesting consolidation could reset expectations rather than derail the broader cycle.

Key takeaway

Bitcoin’s tariff shock has intensified, dragging prices down to $88,000 as leverage unwinds and macro stress spreads. For now, the move looks driven more by geopolitics and global risk aversion than by crypto-specific weakness. With gold surging and trade tensions escalating, Bitcoin is caught in the crosscurrents of a broader market reset. Whether this proves to be a deeper trend shift or a painful pullback will depend on how quickly macro uncertainty begins to ease.

Bitcoin technical outlook

Bitcoin is consolidating after its sharp pullback from recent highs, with price holding within a defined range and remaining above the $84,700 area. Bollinger Bands have narrowed following an earlier period of expansion, indicating a contraction in volatility as directional momentum has slowed. 

Momentum indicators reflect this stabilisation phase: the RSI is rising gradually but remains below the midline, signalling recovering momentum that has not yet returned to prior strength. Structurally, the market remains capped below the former resistance zones around $104,000 and $114,000, with current price behaviour suggesting balance and consolidation rather than active price discovery.